UPDATE: The Bank of England (BoE) has opened a consultation on its “updated approach to authorising and supervising international banks and insurers”.

It said it aims to implement the consultation into policy by February.

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ORIGINAL STORY: The Bank of England (BoE) will unveil post-Brexit plans to allow banks from the EU to operate in the UK under the same conditions as now, according to reports.

The BBC has reported that EU firms providing wholesale finance will be offered a licence to operate in Britain through their local branches, rather than subsidiaries created for the purpose.

This would save firms the cost of allocating separate shock-absorbing capital to subsidiaries, and allow them to bypass local licence restrictions. Last month, Volkswagen Financial Services said it was considering applying for a UK banking licence to continue operating after Brexit – a move that might not be necessary anymore under the BoE’s proposed regime.

Miles Celic, head of lobby group TheCityUK, said: “Encouraging EU banks to continue to operate in the UK will help preserve financial stability for the UK and the EU and will help defend London’s position as an open global financial centre.”

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Last Monday, Michel Barnier, chief EU negotiatior for Brexit, said in an interview with The Guardian that financial services firm would naturally lose passporting rights as a consequence of the UK’s departure from the single market.

TheCityUK subsequently accused Barnier of “playing Scrooge”, and said that “just because financial services have not been encompassed in free trade agreements to date is no reason to dismiss them from a future UK/EU free trade agreement.”

In related news, Barnier said that a transitional period leading to the UK’s full departure will not last beyond 2020.